The goal of "Nonprofit Conversation" is to provide a forum for discussion of nonprofit success and challenges. Bunnie Riedel (host) provides advice, observations and solutions for the nonprofit community. Guest bloggers will be invited to share their ideas and interviews will be conducted with nonprofit executives, board members and other experts in an effort to create a "conversation."

Monday, December 20, 2010

Count me in as one of those who makes last minute end of year gifts. I actually spend quite a bit of time thinking about it, who I will give to, why I give, etc. I am most interested in giving to organizations that do work I am interested in or work on issues I care about. However, even though I already know where my end of year donations are going, I am hoping my these organizations will make it simple for me.

Gail Perry of Gail Perry Associates lays out simple, easy steps you can use (and you can use them right away!) to make those last minute appeals and drive your fundraising up before the New Year. Read, get inspired and then get in there! Bunnie

10 Things Your Last Minute Online Donors Want

by Gail Perry, Gail Perry Associates

Holiday giving is expected to be over $48 billion this year, and at least $6 billion will be online, based on a new study by Convio.

43% of donors will give via direct mail and 21% from online appeals.

And 40-60% of those online gifts will be made in the last two days of the year.

1. They want to feel good about their gift.

Remember that your donor is making a personal, emotional statement with their gift. They are not shopping for hardware or bath towels.
Talk a lot about the good they are doing. Put evocative photos on your donation page.
Make your post-gift finish page warm and fuzzy. Send a lovely thank you note that touches their heart.

2. They want to feel connected to the cause.

In the Convio study, 74% of people said they responded most to emotional solicitations that provide info on the people, animals or places in need of their assistance.
Get yourself and your organization out of the way.
Don’t ask for your organization, instead ask donors to help the animals, trees, kids, sick people, students, artists, whoever you are serving and helping.
As I like to say, “You gotta play that violin” and make the emotions stir!

3. They want to know where the gift is going.

They want to know exactly what their gift is accomplishing – and the impact it will have. Lay it out clearly and don’t mess around.
Recap your outcomes and accomplishments for the year, and let them know what’s next.
Be specific.

4. They want holiday gifts that will support your cause.

Help your donors make gifts, and offereasy shopping for nontraditional gifts. Try these opportunities:

“Avoid the crowds and shop at home” – buy from our shop on line and ship to those on your gift lists.

“Holiday e-cards for your family and friends” – a green alternative that can promote your nonprofit AND carry a donation to your cause.

5. They want to be reminded.

It’s ok to remind your loyal donors about the need and how they can help.
They’re busy, busy, busy. And repeating your appeal is always more powerful and successful than a single ask that goes out as a stand-alone effort.
Check out this sample year-end email campaign that had three messages going out the last week of the year:

December 23: a “holiday support” email

December 29: an email emphasizing tax deductible giving opportunities

December 31: a final “last chance to donate” email

6. They want choices.

And all donors have a different vision of how they want to help you and how they want to give.
So be sure to offer them a variety of ways to support you and different giving opportunities all tied to specific results your organization achieves.

7. They want an uncomplicated check out.

Remember that a majority of would-be donors never make it through the process to complete their gifts. Some stats show that 98% of visitors to an organization’s donate page do not complete their gift.
Make your donate page seamless and easy to whiz through.
Check out this list of the 11 Deadly Sins of Donate Page Design from Seachangestrategies.com. Be sure you avoid these common mistakes in nonprofit donate pages:

Cluttered pages

Unintuitive layouts

Unclear directions

Too long, complex forms

Unnecessary fields

No address or phone number

Error messages are confusing

8. They want back up data on your results.

Be sure your web site is up to date and conveys credibility.
Remember that over 65% of ALL DONORS will probably check out your web site before they write a check or make a gift, according to Kivy Leroux Miller of nonprofitmarketingguide.com.
Here’s my list of the Top 10 Things donors want from your website. And be absolutely sure that your call to action is clear, concise and directive!

9. They want to donate quickly.

Make it easy for impatient online donors who are in a hurry. If you make it difficult for them, they’ll be gone – probably to another nonprofit’s site.
Make your home page on your site optimized for donations. Put an extra large “donate now” button right on that page. (Yes, size does matter!)
And try adding a photo on the inside of the button so that it has a human face. (Dogs and children are wonderful.)
Check out Network for Good’s three tips for the best donate button: make it big; put it above the fold, and create a simple, easy-to-use contribution form.

10. They want it simple.

Since they are busy, busy, busy, don’t over complicate your site or the ask. People visiting your site at year-end are there for one purpose only – to give.
Put the ask right up front and make it easy for them.
These strategies will help you bring in lots and lots of online gifts. Before you know it you’ll be zooming past your fundraising goals for year-end!
Happy prospecting and may generous donors flood in to your site and your cause!
Please leave a comment and tell me what you think

Monday, December 13, 2010

While we would like to think that fraud doesn't happen as often in the nonprofit community as in the business community, it simply is not true. I still remember the story of the national religious organization whose Treasurer walked off (for a period of time) with $2 million dollars. While speaking to someone who knew the story I asked "How could that have happened?" The response was that the Treasurer had buried the Board in paperwork, creating confusion and a subterfuge to mask her thievery.

In my own experience, I caught an attempt at fraud by an employee who had given her resignation. She had lifted at least one check and might have cashed it had I not discovered the check was missing. Could she have done major damage? Not really, but it was a lesson for me to do better at checking potential employees' backgrounds. Seems she had done the same thing on more than one occasion at her previous job. The following article by Dr. Eugene Fram and Dr. Bruce Oliver provides excellent advice on what you need to do in order to protect your nonprofit against fraud. Enjoy! Bunnie

The board of the Association for Underprivileged Children is meeting in the aftermath of a dreadful situation. The police report summarizes what happened:

Over $50,000 designated for camping scholarships for the Association for Underprivileged Children has been stolen. The perpetrators are John Roe, the Association’s chief financial officer and his wife, Nancy, the camp director. The couple pilfered assets over a three year period. Nancy requested camp expenses, such as athletic equipment, for nonexistent campers. John then approved payment to a shell company operated by Nancy. Both are currently thought to be in South America. The organization doesn’t have fraud insurance. Funding for the current camping program is in jeopardy.

﻿

Dr. Bruce Oliver

﻿ While the above scenario is fictional, it approximates an alarmingly common occurrence. One estimate, by Harvard University’s Houser Center for Nonprofit Organizations, suggests that fraud losses among U.S. nonprofits are approximately $40 billion a year.

How can nonprofits avoid such traumatic situations? The first step is to make certain that board members have the knowledge necessary to keep fraud at bay. Here are some suggestions for doing just that:

Be sure your board has the following committees:

(1) A finance committee charged with these tasks:

• Review the overall results of a yearly independent audit, conducted by an outside auditor.

(2) A separate dedicated audit committee containing only independent board members. (Since nonprofit board members aren’t compensated by the organization, all directors are, by definition, independent. However, some directors may have strong social, family, or political links to management personnel. It’s prudent to exclude such people from serving on the audit committee.) The board members on this committee should be reasonably financially competent, with at least one having a strong finance background who is able to overview audit issues in detail. In particular, the committee should do the following:

Conduct a yearly review of conflict-of-interest policies.

Make certain that all employees and board members sign a conflict-of- interest statement.

Assure that new hires are vetted for honesty.

Meet every four to six months. (In times of organizational emergency or stress, meetings may be required more frequently.)

Be sure that a certified audit is completed at least every two years – once a year if at all possible.

Hire an external auditing firm

In the past, it was common for managers to select the external auditing firm with “rubber stamp” approval by the board. In today’s more vigilant environment, the board must be more involved. Hiring an auditing firm should be a partnership effort between management and board. The task is as serious as hiring a CEO and should be given the same amount of time and care.

The board audit committee should review the following information when hiring the auditing firm:

the nonprofit audit experience of those who will be performing the audit

the history and client list of the auditing firm

the proportion of the firm’s clients that are nonprofits

the size of the firm and whether it has the ability to serve a new client well

the estimated costs for each audit

the firm’s suggestion for a financial consulting firm if your organization needs such counseling. (It’s a conflict of interest for an auditing firm to do both auditing and financial consulting.)

Meet with external auditors

When your board’s audit committee meets with the external auditors, the organization’s CFO and other key financial personnel will be present. At some point in each meeting, however, board members need to meet with the auditors in executive session without the CFO, CEO, and other managers. At these private sessions, board members need to ask the auditors, “Do you have anything to tell the board without management present?” This gives auditors a chance to report any concerns that need board consideration, such as unusual travel, entertainment, or other expenses or any transactions that raise red flags. Audit committee members also have an opportunity to raise questions about the professional competence of the organization's internal financial personnel.

Some larger organizations may employ one or more internal auditors. The audit committee should meet with these people several times a year.

Unless specified in the audit agreement, fraud detection is a secondary purpose of the external audit. The main purpose is to assure that information in financial statements is a fair representation of financial activities. However, auditors can -- and often do -- uncover indications of fraud during a routine audit, and it’s their duty to report it.

Develop a conversation with external auditors

In the typical nonprofit, only one or two audit committee members will be able to formulate detailed technical questions for the external auditors. However, to help uncover fraud, every board member should be familiar with six audit- related topics and be able to pose questions about these six topics:

(1) Are internal controls adequate? The organization’s control system needs to be divided into operating functions. Then, each operating function must be performed by someone different so that each person checks the others’ work. For example, a sales associate completes a retail sale, but a sales audit person deposits the cash to the bank account. In addition, all financial people need to take scheduled vacations so that another employee is responsible for the vacationer’s work for at least two consecutive weeks a year. (In the fraud case that begins this article, the transactions between husband and wife shouldn’t have been allowed. At the very least, the transactions should have been reviewed in detail by a qualified independent third party. Proper internal controls would have brought the fraudulent situation to light.)

(2) Are financial records accurate? External auditors must certify that the following records are in proper form: financial statements, management contracts, sales of major assets, bonus payments, and long term lease agreements.

(3) Are activities and expenditures properly authorized? For example, have any extensive changes in plans been approved by the board? Have major expenses been properly budgeted? Have travel costs over a prescribed level been approved by a senior officer? Depending on the size of the organization, do all expenditures over a certain amount require two signatures from senior officers?

(4) Do all reported assets actually exist? This question is especially important to answer if the organization holds any physical assets at a distance from its main offices.

(5) Is the organization performing any activities that might endanger its tax-exempt status? Smaller nonprofits sometimes let licenses or even tax-exempt certificates lapse. It’s vital to certify that such documents are up to date and that taxable income and charitable donations are reported separately.

(6) Is the organization paying its payroll taxes, sales taxes, and license fees on time? Does the organization file its financial reports, like the IRS 990 report, on time? Many fraudulent cases involve failure to report and pay employee withholding taxes.

Trust but verify

Since fraud is such a pervasive cancer in the nonprofit environment, it needs intense board attention. Cases of nonprofit fraud undermine the good work of the organization and the nonprofit sector.

Every board member should know enough about finance to spot suspicious activity when it occurs. Everyone involved in the organization should be alerted to the fact that board members are giving serious attention to the fraud issue. That knowledge, in itself, may deter someone from trying to steal.

Prime Reading for Your Board

Be sure all board members have read the following Nonprofit World articles (available at www.snpo.org/members):

The Audit Committee: Why You Need one, How to Form One (Vol. 6, No. 6)

Setting Up a Control System for Your Organization (Vol. 16, No. 3)

New IRS Employment Tax Initiative: What Does It Mean for Nonprofits? (Vol. 28, No. 2)

Conflict of Interest in the Board Room (Vol. 17, No. 2)

How to Find the Perfect Auditor (Vol. 22, No. 3)

Dr. Eugene Fram (eugenefram@yahoo.com) is professor emeritus, E. Philip Saunders College of Business, Rochester Institute of Technology (RIT). He is the author of Policy vs. Paper Clips, which describes a nonprofit governance model that has been adopted by thousands of nonprofit organizations. Dr. Bruce Oliver (blobbu@rit.edu) is professor of accounting and director of the Saunders Institute for Business Ethics and Corporate Social Responsibility at RIT.

Thursday, December 2, 2010

My nonprofit expertise includes a healthy dose of public policy advocacy. That said, I have never used this blog for a “call to action” on specific legislation. However, today I must.

Deep in the health care legislation was a buried provision that will wreck havoc on nonprofits and businesses alike. It’s being called the “1099 Rule.” The legislation mandates that all businesses and nonprofits issue 1099’s to any individual or corporation from whom the business or nonprofit has purchased $600 or more in services and goods.

This is a major change in our tax law. Currently, nonprofits must issue a 1099 to an individual or unincorporated business if they purchase $600 or more in services. Say you contract with someone to sell advertising for your summer tradeshow or you bring in a strategic planning consultant to work with the board. You would issue a 1099 to that person if the total payments over the course of a year were $600 or more. However, you wouldn’t issue a 1099 for purchasing the conference space for your trade show or for the cost of renting a conference room.

This 1099 rule would apply to all purchases made over the course of a year. So if your nonprofit purchases $2,000 worth of goods from Staples, you will have to issue a 1099 to Staples. Or say you buy a new computer from Best Buy, you would have to issue a 1099 to Best Buy.

To issue the 1099, you will have to know where to send it. Additionally, you will have to have the Employer Identification Number of Staples or Best Buy or whatever company you’ve purchased goods from.

Perhaps large nonprofits or businesses will be able to assign a staff person or two to track down the corporate address and EIN of their vendors, but smaller entities typically don’t have that luxury.

Nonprofit and business groups have been working to get the 1099 Rule repealed. As of November 29th, that effort failed to pass the Senate. This is the second time the repeal has failed to pass.

The American Society of Association Executives has information on this issue ASAE and it has a sign-on letter your nonprofit can use. I recommend you download the letter, sign it and email it in. All mail to the Capitol is irradiated and takes two to three weeks to reach the member’s office, also, often the irradiation process tears up the envelopes and the letters.

Additionally, I recommend you pick up the phone and call your Senators and Representative.